My brother is addicted to opioids and has taken sudden interest in our mother’s estate

My brother is trying to convince our elderly mother to place all of her assets into a limited liability company (LLC), naming him and me as LLC members, in order to protect her estate in the event that she requires long-term care. While I agree that a LLC is a good idea for her estate, I am suspicious of my brother’s motives. My brother is a drug addict (opioids) and is deeply in debt.

Over the last several years, my mother has helped him financially, rather significantly, in hopes that he would kick his addition and get back on his feet. Last year, my mother finally stopped her financial support in order to preserve what’s left of her savings. She primarily lives on Social Security and some revenue generated from her assets.

I am concerned that his push for the LLC is a hidden disguise to gain access to her assets and/or the revenue that is generated from them.
Daughter in South Carolina

His drug addiction has taken a terrible toll on our family. To make a long story short, he is in desperate need of money to settle his debts owed to creditors. I am concerned that his push for the LLC is a hidden disguise to gain access to her assets (mainly land properties) and/or the revenue that is generated from them. As a member of the LLC, would this be possible?

Could he use the LLC’s assets as collateral for his own financial problems? Finally, can my mother continue to receive the revenue generated from the assets held in the LLC?

I want to make sure my mother is financially protected. Your advice would be much appreciated. Please note that my brother is currently getting treatment for his addiction. We are praying that his recovery is successful this time around.

Daughter in South Carolina

Dear Daughter,

So the answer to all of your questions is — in theory — yes. All those scenarios are possible, although it’s not likely that using the assets of the trust as collateral for his personal debts would be legal.

Your brother is in the throes of addiction, has a line of creditors all baying for money and his mother’s estate is one big solution to all of his problems. Or, at least, that may be the way he sees it. For his sake, I hope that he finds a way to put his life back on track. Does he have ulterior motives for setting up an LLC with your mother’s estate? If I was a betting man (which I’m not) I’d say it’s whatever comes after more than likely. Would it be a temptation to plunder your mother’s estate even if his intentions were honorable? Yes. Avoid this at all costs. (The headline says it all.)

An LLC operates similarly to a company or partnership, but without a lot of legal paperwork and annual filings, and lower rates of taxes. Members of the LLC are not personally liable for any debts. That does not include situations where a person may use the funds to pay a personal debt or other cases of fraud or negligence, however. You can set up a family trust with a trustee who you trust — again, the clue is in the title — and make payments to family members and ensure that the money is either distributed fairly after your mother dies or family members receive an income, which may be wiser in the case of your brother.

Do you have questions about inheritance, tipping, weddings, family feuds, friends or any tricky issues relating to manners and money? Send them to MarketWatch’s Moneyologist and please include the state where you live (no full names will be used).

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